The US Dollar experienced broad weakness against major currencies, including the Indian Rupee (USD/INR) and Swiss Franc (USD/CHF), as optimism grew over a potential permanent ceasefire between the United States and Iran. This sentiment was fueled by positive remarks from US President Donald Trump, who stated in a Fox Business interview, 'I think it’s close to over, yeah. I view it as very close to being over,' regarding the war with Iran. Trump also indicated to The New York Post that negotiation teams from Washington and Tehran could resume talks in Pakistan within the next two days [1][2]. US Vice President JD Vance confirmed that talks are ongoing through channels including Pakistan and will continue as both sides work toward a deal [2].
The anticipation of a US-Iran truce led to a sharp decline in oil prices, with WTI crude sliding below $90.00 on hopes that the ceasefire would ease the supply crisis. However, market experts cautioned that supply constraints may persist due to significant damage to energy infrastructure in the Middle East [1]. The Indian Rupee benefited from the drop in oil prices, as India is a major oil importer, with USD/INR falling to near 93.20 at the open and trading around 93.25, supported by the 20-day EMA at 93.10. The 14-day Relative Strength Index for USD/INR was around 52.7, indicating neutral-to-slightly positive momentum [1].
The US Dollar Index (DXY) ticked higher to near 98.15 but remained close to its almost seven-week low of 98.00, reflecting the diminished appeal of safe-haven assets amid improved market sentiment [1][2]. The USD/CHF pair traded flat around 0.7812, near its monthly low of 0.7790, as the US Dollar underperformed on ceasefire optimism [2].
Market implications included a cooling of daily selling by overseas investors in the Indian stock market since the announcement of a two-week ceasefire between the US and Iran on April 7 midnight. Foreign Institutional Investors (FIIs) remained net sellers in seven out of eight trading days in April, offloading Rs. 40,955.81 crore, but the amount sold since the truce was Rs. 5,834.25 crore, one-fifth of the amount recorded in the first week of the month [1]. Additionally, traders are no longer pricing in interest rate hikes by the Federal Reserve this year, a sharp turnaround from two hike projections seen in March after the war started, as inflation expectations have de-anchored due to US-Iran optimism [2].
Looking ahead, investors are focused on India's WPI Inflation data for March, estimated to have grown at an annualized pace of 3%, up from 2.13% in February [1].
CONCLUSION
Optimism over a potential US-Iran ceasefire has weakened the US Dollar, boosted the Indian Rupee, and pressured oil prices lower. Market sentiment has improved, reducing safe-haven demand and altering expectations for US monetary policy. Investors are now watching upcoming inflation data and ongoing diplomatic developments for further direction.